It is general practice for letting agents in Scotland and England to have clauses in their agreements with landlords acknowledging the landlords’ responsibilities in relation to HMO licensing in accordance with the provisions of the relevant legislation and to place the burden of HMO licensing on the landlord.
Following a recent decision in the English courts, we consider the legal position surrounding the liability of letting agents for HMO licensing in Scotland and explain why they should not proceed on the assumption that they will be absolved of any responsibility by including relevant wording in their agreements with landlords.
In a recent prosecution in England, the London Borough of Camden prosecuted a “let only” agent who had received the initial month’s rent for a property and was holding the tenancy deposit in accordance with an insurance based tenancy deposit scheme. The District Judge accepted Camden’s argument that receipt of the first month’s rent was enough to make the agent a person managing the property for the whole of the fixed term of the tenancy (in accordance with the Housing Act 2004) and therefore found the agent responsible for HMO licensing of the property. The agent was convicted for breaches of the Management of Houses in Multiple Occupation (England) Regulations 2006. The deposit question was not ruled on in this case and there has been no appeal but these issues are expected to be heard in the High Court in England in due course.
Of course Scotland has its own Housing (Scotland) Act 2006 (the legislation governing HMOs) in which the responsibility and liability wording is different. However, the position taken in the Camden case might have a knock-on effect on the interpretation of the Scottish Act in relation to HMOs.
Where does responsibility for an HMO licence lie?
Under the Housing (Scotland) Act 2006 (‘the 2006 Act’), it is the landlord, as the owner of the property, who must apply for an HMO licence. The owner commits an offence if they let to three or more persons who are not all members of the same family or of one or other of two families, without an HMO licence.
However, Section 154(4) of the 2006 Act extends liability for failure to have an HMO licence beyond the owner of a property to a person who “does anything as agent for the owner of any living accommodation which directly permits or facilitates the occupation of the living accommodation (a) as an HMO which requires to be licensed under this Part at any time when (i) it is not so licensed.”
This wording is different from the wording of the English 2004 Act interpreted and ruled on in the Camden case, but this section provides the potential for the Scottish courts to decide in a similar way to that District Judge.
Letting agents beware
Whether you are a let-only agency or a full-service letting agency, you should be aware that in line with this provision, you could face criminal liability if you act for a landlord who owns a property not properly registered as an HMO.
The legislation is written in very broad terms – “does anything as agent for the owner…” – so it might be assumed that an agents’ liability could be interpreted even more strictly in Scotland than in England. Therefore, agents should check the HMO position before accepting a tenant’s deposit or holding the first month’s rent on behalf of a landlord.
What should letting agents do?
Agents should have sufficient safeguards in place to ensure each landlord for whom they act in any phase of the letting process, has an HMO in place if required. While this places an added burden on letting agencies, it appears to be the only way to ensure agents are protecting themselves from criminal liability under the Act.
It is worth noting that while the Judge in the Camden case convicted the agent, absolute discharges were given (although fines were imposed for failure to licence). This is presumably because the agents were technically guilty but the Judge believed they were, in reality, blameless. Notwithstanding this, both the 2004 and the 2006 Acts provide for a judge to attach criminal liability for such breaches, even if the Judge did not do so in this case.
If agents are concerned that a property they are asked to manage or find a tenant for is not HMO licenced when they believe it should be, they should take advice. The only defence to acting for a non-HMO licensed property is a “reasonable excuse". Failure to correct a mistake quickly may mean the “reasonable excuse” defence to criminal liability under the 2006 Act would not work to avoid a conviction.
